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China: Overcoming Rural Poverty
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China is widely recognized for its achievements in reducing absolute poverty since the adoption of a broad program of rural economic reforins beginning in 1978. Based on the government's austere rural poverty line, official estimates indicate that poverty declined from more than 30 percent of the rural population in 1978 to less than 5 percent by end-1998. The Chinese government has a strong commitment to poverty reduction, and the scale and funding of its poverty reduction program, and the sustained dramatic reduction of absolute poverty over the last twenty years of reform, are exemplary by any standards.
Estimates based on an international poverty line document an equally steep decline in the incidence of poverty in China. However, since the international standard is somewhat less severe than China's official poverty line, it indicates greater numbers of poor in all years, and that by end-1998 a much larger share of the rural population - about 11.5 percent or some 106 million people -remained in poverty. While China's austere poverty line was a useful standard when the incidence of extreme poverty was greater, the international standard has now become a more appropriate measure to gauge the extent of poverty and guide the government's poverty reduction program in the next century. Available evidence also shows that an increasing share of the remaining rural poor are now concentrated in China's western provinces, and mostly within remote and mountainous townships. The educational, health, and nutritional status of these remaining rural poor is deplorable, and minority peoples and the disabled are known to represent highly disproportionate shares of the rural poor.
Assisting these remaining poor requires the continuance of the existing poverty reduction system. The key issue is not allocating more funding for poverty reduction, but is instead making more efficient and effective use of available funding. This can be achieved through a number of measures. First, available poverty reduction funding should be targeted to all poor townships. The current system of targeting the nationally-designated 592 poor counties results in the provision of very little assistance for the half of the poor residing outside the designated poor counties, and to a very substantial leakage of assistance to the non-poor within the poor counties. Second, financial monitoring and supervision of the use of poverty reduction funds must be greatly strengthened. At present, the weak fiscal situation in China's poor areas motivates local governments to divert a large share of poverty reduction funding to alternative uses, and the very limited supervision of the use of available funding often leads to poor quality of poverty reduction works and activities. A number of government agencies provide funding and other support for poverty reduction, and the overall coordination and accountability of this array of assistance is inadequate. Third, the effectiveness of funding to increase the productivity of upland agriculture (where the majority of China's poor attempt to eke out subsistence levels of production) could be greatly enhanced through (a) adopting a multi-year "project-based" approach with greater community participation in design and implementation, (b) developing appropriate applied agricultural technologies, and (c) completing realistic assessments of the market prospects for a wide array of niche crops which are now being planted extensively in China!s upland areas. Fourth, greater efforts must be made to provide the poor with improved access to basic education, health, credit, water supply, and roads and other basic infrastructure.
Fifth, past attempts to foster enterprise development in the poor areas through direct funding have had mixed results. Local government should instead focus on providing an enabling environment for rural enterprise development. Finally, China's poverty reduction work could be enhanced by forging stronger links with other government, academic and civic organizations. The next generation of poverty work could include contracting the implementation of some small projects to grass roots and civic organizations, which might enable the poverty program to try new and innovative approaches, and improve its outreach.
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